ALEXANDER HAMILTON: TAXAHOLIC!

Commenting on the decline of true liberalism, libertarian giant Ralph Raico wrote the following shortly before he recently passed away, “In America, the liberal country par excellence, the chief aim [of classical liberals] was to fend off incursions of government power pushed by Alexander Hamilton and his centralizing successors…”

Profound and deleterious consequences of the actions of that damn taxaholic continue to haunt Americans to this day. As America’s first Secretary of the Treasury, Hamilton’s policy of taxing whiskey sparked the so-called Whiskey Rebellion. “The tax was resisted by farmers in the western frontier regions who were long accustomed to distilling their surplus grain and corn into whiskey. In these regions, whiskey was sufficiently popular that it often served as money [and was crucial to the farmers’ subsistence]. Many of the resisters were war veterans who believed that they were fighting for the principles of the American Revolution, in particular against taxation without local representation, while Hamilton maintained that the taxes were the legal expression of the new powers of Congress.” https://en.wikipedia.org/wiki/Whiskey_Rebellion In response, President Washington at the urging of Hamilton activated and led a force of 13,000 militiamen to suppress the revolt. The Whiskey Rebellion was the first time the new government wielded military force against its own citizens, but not the last.

Although they lost their battle to prevent the adoption of the Constitution, which changed the nature of American government from a weak and dispersed to strong and centralized authority, Hamilton’s opponents, the Anti-Federalists, managed to insert in the Constitution measures designed to prevent the federal government from evolving into the Leviathan they knew it could become and engorge their liberty by means of taxation. Foremost among those measures, and even more important to the preservation of individual liberty than any of the subsequently added amendments constituting the Bill of Rights, were severe limitations placed on the size of government by directly and indirectly inhibiting the amount and scope of federal taxation by means of certain Sections inserted in Article I of the new Constitution. Today these Sections remain in the Constitution but have become useless anachronisms thanks especially to Alexander Hamilton.

The first of the provisions designed to protect Americans from losing their liberty to taxation is contained in Article I, Section 2: “Representatives and direct taxes shall be apportioned among the several states which may be included within this union, according to their respective numbers.” Apportioning of direct taxes required by this language was so important to the Anti-Federalists that they managed to reiterate it in Article I, Section 9: “No capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken.” This is the only constitutional provision twice stated in the Constitution.

Although Hamilton didn’t invent the freedom- and prosperity-robbing individual income tax, he was largely responsible for making it possible. Hamilton represented the federal Treasury before the Supreme Court in the first challenge to a direct tax, which had been levied by Congress without being apportioned almost before the ink on the new Constitution had dried. In 1796, Hamilton successfully argued on behalf of the government that a direct tax on personal carriages was not a direct tax. (Properly understood, a direct tax is one that is collected directly from the taxpayer, as opposed to an indirect tax collected from third parties who in turn passes the tax on to taxpayers in the price of a product or service when taxpayers purchase them.) Hamilton argued that the carriage tax was not a direct tax on carriage owners, although the owners were required to pay it, but rather was an excise tax on the owners’ use of the carriage, and thus need not be apportioned. The only logic behind the Supreme Court’s decision to allow this direct tax on the owners of carriages to be collected without the required apportionment was that the justices felt the government needed the money more than individuals needed their liberty! The case, Hylton v. United States, 3 U.S. 171 (1796), ranks with Dred Scott v. Sandford, 60 US 393 (1857), wherein the Court decided a negro was not a person, for stupidity and mendacity.

(Without delving into the many ramifications of direct taxation, suffice it to say here that such taxes are far more onerous to taxpayers in their collection than indirect taxes. The latter can be avoided by refraining from purchasing taxed items. When they are apportioned as required by the Constitution, it is nigh on to impossible for legislators to vote for direct taxes because their constituents, sensitive to losses of their liberty, are likely to throw the bums out of office at the earliest possible opportunity. For that reason, it was assumed by the Anti-Federalists that direct taxes would only be resorted to under dire circumstances, such as an invasion by a foreign state. Hamilton must have had other ideas.)

Hylton stood for 99 years as a legal precedent enabling additional direct taxes masquerading as excises to be enacted by Congress and approved by SCOTUS, including the first income taxes during the Civil War. After those war taxes expired, another income tax was levied without apportionment in 1894. The following year, in the most courageous political decision and opinion a majority of justices have ever rendered, SCOTUS ruled that the 1994 income tax was unconstitutional because it was a direct tax, which had not been apportioned. The case, Pollock v. Farmers’ Loan & Trust Company, 157 U.S. 429 (1895), also served to invalidate the precedential authority of Hylton and several other SCOTUS decisions that depended on Hylton, wherein direct taxes not levied proportionately had been wrongfully held by the Court to be constitutional.

The Pollock court struck a mortal blow against the federal government’s ability to impose direct taxes and expand in size and power virtually without limit. Quasi-socialists in America, better known as progressives, went ballistic. For the next sixteen years, the forces of big government chaffed, lobbied, plotted and planned an assault on the Pollock decision culminating in passage of the Sixteenth Amendment in 1913. (The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.) Enactment of the first progressive income tax under the new law followed immediately. The Amendment and the tax were sold to Americans as a “tax the rich only” scheme, which indeed it was in its few first years, but it soon morphed into the working class’ worst nightmare. Since then, the federal government has been able to grow exponentially without restraint at the expense of individual liberty, the people’s prosperity, and to the detriment of the several states’ authority. Progressive laws and agencies have burgeoned, enabling bureaucrats to take control of the economy and the lives and wealth of the American people.

Nothing will change the ever-upward trajectory of the size and power of the federal government for as long as the individual income tax and withholding at the source remain in force. The good news is that abolishing the tax without replacing it would make “draining the D.C. swamp” a fait accompli. It doesn’t require repealing the Sixteenth Amendment nor changing the Constitution. An act of Congress will do it.

The first American politician to proclaim abolition of the income tax to be his or her paramount objective in seeking the presidency will be swept into office on a landslide of historic proportion. Such a happenstance is likely as early as 2020. If Donald Trump fails to embrace abolition, the D.C. swamp will remain and he will be a one-term president no matter what else he may or may not achieve while in office.

Disciple of Jesus, Voluntaryist, Writer, "Tax Denier" (current IRS term) Illegal-Tax Protester (former IRS designation to which I added a hyphen to make what I protest clear), Founder, 2nd Abolition Movement rid American of the enslaving individual income tax.